Correlation Between EPR Properties and Legacy Education

Can any of the company-specific risk be diversified away by investing in both EPR Properties and Legacy Education at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EPR Properties and Legacy Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EPR Properties 5750 and Legacy Education, you can compare the effects of market volatilities on EPR Properties and Legacy Education and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in EPR Properties with a short position of Legacy Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPR Properties and Legacy Education.

Diversification Opportunities for EPR Properties and Legacy Education

-0.41

Correlation Coefficient

EPR Properties  Legacy Education

Very good diversification

The 3 months correlation between EPR and Legacy is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding EPR Properties 5750 and Legacy Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education and EPR Properties is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EPR Properties 5750 are associated (or correlated) with Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education has no effect on the direction of EPR Properties i.e., EPR Properties and Legacy Education go up and down completely randomly.

Pair Corralation between EPR Properties and Legacy Education

Assuming the 90 days trading horizon EPR Properties 5750 is expected to generate 0.2 times more return on investment than Legacy Education. However, EPR Properties 5750 is 4.9 times less risky than Legacy Education. It trades about -0.32 of its potential returns per unit of risk. Legacy Education is currently generating about -0.07 per unit of risk. If you would invest  2,210  in EPR Properties 5750 on September 23, 2024 and sell it today you would lose (113.00) from holding EPR Properties 5750 or give up 5.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EPR Properties 5750  vs.  Legacy Education

EPR Properties 5750

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPR Properties 5750 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Legacy Education

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Legacy Education are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Legacy Education showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EPR Properties and Legacy Education

The main advantage of trading using opposite EPR Properties and Legacy Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPR Properties position performs unexpectedly, Legacy Education can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Legacy Education will offset losses from the drop in Legacy Education's long position.

The idea behind EPR Properties 5750 and Legacy Education pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.